138 Billion Units (Apple's Cash Position)
dcurt.is
dcurt.is
Securities held by corporations as assets are shown both by type of instrument and by "intent" of the holding. In this case, the types of instruments shown on the latest 10-Q [1] are, as the post describes, cash and cash equivalents, short-term securities and long-term securities. But that only applies to the security itself, not Apple's intent: a 30 year government bond would be classified as "long term," but it could easily be sold tomorrow in one of the most liquid financial markets in the world.
Under GAAP, what is also relevant is a label on the "intent" of the holding: trading, available-for-sale, or held-to-maturity. According to the same 10-Q, all of these securities are classified as available-for-sale. The original post conflates these two ideas and mistakenly assumes that the ~$67B of long term securities will be held until they mature. Were that Apple's intent, they would likely be classified as held-to-maturity, rather than available-for-sale.
(The classification as to intent matters, as it affects how unrealized gains/losses from the securities held flow into the income statement in any given period.)
It's a technical point, to be sure, but the post's conclusion that long term security != ready cash is not quite right.
Regardless, Apple's numbers amaze me every time I look at them.
[1] http://investor.apple.com/secfiling.cfm?filingID=1193125-12-...
I think the central point of my article stands because the tax burden associated with bringing Apple's significant foreign investments (about 60% of their cash, reportedly) back into the United States would be prohibitive and restrict any kind of heroic or crazy deals from being announced tomorrow. And Apple's investments are not in cash.
If anyone would like more information about the structure of Apple's investments, see page 7 of the most recent 10-Q: http://files.shareholder.com/downloads/AAPL/1738322915x0x536... The parent commenter is correct that the vast majority of holdings are in things like us treasuries and corporate bonds, which can be liquidated immediately.
If Apple had a productive use of $50b in the USA, I think they could raise it.
i can't see why. does netflix have a lot of exclusive content deals that apple can't get? it seems like most things that are on netflix are already on itunes. also, netflix is popular because it's available on all kinds of devices which doesn't seem to be a policy that apple is likely to continue. if apple doesn't need netflix' customer base or content, why would they purchase them?
This is the American Airlines website of financial analysis blog posts IMO.
This is a great example of "talking your book".
Apple could buy them just to be anticompetitive and block all the competition from having it (which would be huge imagine if the Apple TV was the only way you could stream Netflix to a TV). I don't see the government allowing that though.
Is that really so hard? Honest question; I just can't imagine how streaming video could be a very difficult problem, especially for a company the size of Apple.
could they really? i thought there were laws against that.
They'd be much better off going after a studio like Disney or WB and buying content - they already have an audience and distributing digital content is a known entity. With that amount of cash, they would want content rights, not distribution rights.
My prediction is that once you get those content execs inside Apple, they'll destroy precisely those qualities that make Apple what it is.
Hopefully Apple is self-aware enough to realise this, but with Jobs gone, who knows?
For context, Microsoft had $43B in cash when it issued its first dividend, which was a total of $900M (it also split its stock at the time, which Apple may also do). It paid another dividend a year later, a bit larger, and has raised their yield a few times (not moving the stock much). Cisco's first dividend was when they had $40B in cash and it was also only worth a couple of points.
For dividend distribution purposes, Apple has $100B+, 66% of which is not in the USA (not bad, it is 90% for Microsoft and Cisco). They can easily afford a one-off 2-3 point dividend tomorrow and then announce a regular dividend yield of 2-3 points again without repatriating any cash.
I doubt it will be larger than a few points, which means that the stock will likely fall sharply tomorrow (as it did with both Cisco and Microsoft) as it seems that the market is expecting a much larger dividend.
Note: it is possible to issue a larger dividend without repatriating overseas assets by borrowing against those foreign assets, but I doubt they would do that.
As hncommenter13 pointed out, the breakdown of long term securities vs cash is very wrong.
Additionally, even if it were correct Apple could easily borrow billions of dollars in cash either from a bank or by selling bonds. They'd have no trouble getting the money, which makes the "$10-30 billion dollars" limit pretty artificial.
I'm not convinced it matters anyway - there aren't a lot of things worth more than that which Apple would be interested in.
Looking at a list of the most valuable US companies[1], I guess the following might be interesting:
Intel, Verizon, Cisco, HP, Qualcomm, Walt Disney, Comcast.
Realistically, I think Walt Disney is the only real possibility there (and there are other media stocks that could be interesting - Time/Warner, News Co etc). The other possibility is an unlisted company: Facebook (but I don't think Zuck would relinquish control).
[1] http://money.cnn.com/magazines/fortune/fortune500/2011/perfo...
Assuming trustworthy partners, if you have a cheque to your name for $100, it wouldn't be unreasonable to say that you have $100 cash.
This all gets pulled from SEC filings. Here's the most recent: http://investor.apple.com/secfiling.cfm?filingID=1193125-12-...
I expect Apple will make a move on a content provider soon (Disney? HBO?), but not tomorrow.
Uber-wealthy people are those that have/earn "zillions" of dollars.
If you want to tax redistributively, you should tax the people who actually have the money, not companies. If the company mostly belongs to the "uber wealthy", then they'll get taxed anyway. If it's mostly in the hands of grannies of modest means with a few shares each, then they won't, which is a lot fairer.
- Apple bought a semiconductor design company and brought that in-house.
- Apple does all software design, hardware design, industrial engineering, etc in house.
- Apple develops its own processes for manufacturing their computers (unibody).
- Apple built a chain of retail stores to sell directly to consumers.
Those are just a couple examples; the trend is very clear to me.
As far as I've been able to tell, design and engineering get hauled in because they want to control it. I guess you can add the stores, too.
But buying something like an LCD panel maker? Or a flash maker? Or Foxconn? I'd be shocked.
If I am not mistaken, there were reports that Apple provided at least some of the capital for both Samsung's upcoming fab in Texas and the newly opened Foxconn factory in Brazil. I guess they have decided it doesn't (yet?) make sense to own manufacturing facilities outright, but they seem to be making actual investments in their manufacturing partners rather than just purchasing services. I would say that is indeed further evidence of a tendency toward vertical integration.
[1]http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...
Foxconn is actually a Taiwanese company.
(Technically that can still mean China depending on your definition. I interpreted your comment to mean that the (mainland) Chinese government would block a potential takeover. That isn't directly possible, although clearly they have multiple ways to put indirect pressure on Foxconn. (Not that this will happen anyway, because Apple isn't going to buy Foxconn))
Deeper hw integration (buying chip designers was obvious; I do not think they'll buy a fab; maybe hw assembly if that is somehow non-commodity), or upstream integration (applications on mac osx, content sources, services) would make some sense to me. Buying a shipping company to ship the devices, probably not.
Maybe they could just buy Goldman Sachs.